Also there were broad concerns about new regulations as well as the ability of banks to return capital to shareholders through buybacks and dividends.

But banks appear to be navigating new regulations with relative ease.

And on Tuesday, Bank of America submitted a new capital plan to the Federal Reserve, just one month after it suspended an earlier plan due to a recent $4 billion error.

Although BofA said it would return less capital, on the news shares of BofA rallied well over 4%. "Bank of America may end up being a tempest in a teapot," Cramer said.

Cramer thinks the confluence of these and some other events, including the Credit Suisse guilty plea, may, in hindsight, be viewed as the so-called high water mark.

And if banks are coming back into favor, Cramer thinks the sector could rally sharply, largely because so many pros are underweight. "Not to mention that the group itself is so far behind the rest of the market that if headwinds die down, there are many values. There's now reason to believe the price to earnings multiples should start to expand. "

If you agree with the outlook, Jim Cramer thinks 4 banks currently present significant value.

"For me the cheapest banks are Bank of America now that it has refilled its application, JPMorgan, which I simply can't believe will have as a horrendous a quarter as last time, U.S. Bancorp which has quietly emerged as a terrific national bank and Wells Fargo, the bank with the best exposure to a potential upturn in mortgages."

However, if you have your eye on another bank, Cramer says do your homework and if you like what you find, pull the trigger. "I don't want to split hairs. The whole group is cheap and if banks are coming back into favor, the whole sector could rally five to ten percent."